Chapter 5 Flashcards
(6 cards)
1
Q
if a company owns less than 100% of a company but more than 50%
A
the company is still required to consolidate 100% of accounts but must report a NCI non controlling interest.
2
Q
portion of a subsidiary’s stock held by another investor.
A
Non controlling interest
3
Q
Where does NCI appear on the BS and IS
A
under the equity section of the consolidated balance sheet, and a separate line on the consolidated income statement
4
Q
Why would a company Aquire less than 100 percent of a company
A
- previous owners want to retain interest in a company
- Buyer does not want to invest resources needed to purchase all subs stock.
- Buyer cannot convince all the stockholders to sell
- Smaller investment can be sufficient to achieve buyers goals
5
Q
How do you value the NCI at Acquistiion
A
NCI reported at FV and proportioned to ownership interest.
6
Q
How is Goodwill reported with NCI
A
attributed to each but not in ownership percentages
